Page 9 - NorthAmOil Week 34

NorthAmOil COMMENTARY NorthAmOil

Canadian producers

consider next steps

Canada’s producers are pondering how to remain

competitive in the face of an uncertain future

CANADA CANADA’S embattled producers have had a Battered and bruised
tough year, with their existing challenges exac- Canada’s producers are trying to bounce back
WHAT: erbated by the impact of COVID-19 on the from a particularly tough second quarter of the
Canadian producers are industry. Current news continues to be rela- year, during which oil prices and demand tanked
considering how they tively bleak, with reports emerging last week, for as coronavirus (COVID-19) hit demand. Sec-
should proceed in the example, that Canadian crude-by-rail shipments ond-quarter earnings and production results,
face of uncertainty. had fallen to an eight-year low in June. released in recent weeks, showed heavy losses
The future, on the other hand, is somewhat piling up, driven by large write-downs of oil
WHY: brighter, with production predicted to pick assets and output curtailments. And as the
The industry has taken a up. However, the extent to which it will do so crude-by-rail figures for June show, data from
severe hit this year, and remains highly uncertain in a world in which the second quarter is still emerging.
some investors are now the oil sands appear to be increasingly falling out According to the Canada Energy Regulator
staying away on climate of favour. In response, oil sands producers are (CER), rail shipments of oil declined to about
change concerns. trying to clean up their public image and bolster 42,820 barrels per day in June, down from 58,000
their environmental credentials. bpd in May and 156,000 bpd in April. This marks
WHAT NEXT: The industry has received a boost with the an almost ten-fold drop from a record high of
Producers may have election of Erin O’Toole as the new leader of 412,000 bpd worth of crude-by-rail shipments
a new ally in Ottawa, the national Conservative Party. O’Toole has in February.
though political voiced support for the country’s oil and gas Given that shipping oil by rail is more expen-
uncertainty remains as industry – and a climate policy built on “proven sive than by pipeline, it tends to be a secondary
well. market-based principles for incenting positive option, used when there is a lack of spare pipe-
economic change” – but has pledged to oppose line capacity. And as Canadian producers shut in
a federal carbon tax. But Canada’s political land- up to 1mn bpd of crude at one point earlier this
scape remains as uncertain as the outlook for the year, pipeline capacity was freed up, providing a
country’s oil industry, and investor and public rare reprieve to an industry that has been strug-
sentiment may not align with that of the coun- gling with takeaway capacity for some time.
try’s political leaders. Producers are now in the process of restoring

Week 34 27•August•2020 www. NEWSBASE .com P9